(Reuters) -Canada's Brookfield Asset Management will invest about $1.5 billion in U.S.-based private credit manager Castlelake, the companies said on Monday.

Private credit firms have become an increasingly popular source of capital for they do not face the tighter regulatory scrutiny as traditional lenders.

This multi-trillion market has significant tailwinds that will help drive the growth of our $300 billion credit business over the next decade, Brookfield Credit CEO Craig Noble said in a statement.

Brookfield will acquire a 51% stake in Castlelake's fee-related earnings (FRE) as part of the deal. FRE is used to assess an asset manager's ability to generate profits from revenues that are measured and received on a recurring basis.

Minneapolis-based Castlelake, which specializes in asset-based private credit, will continue to operate its business independently and retain its current leadership structure.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Ravi Prakash Kumar and Sriraj Kalluvila)